AI enables China’s social credits, Lil Miquela is the end of influencers, and the $500bn potential cannabis market

January 10, 2019

The annual snapshot of the world’s consumer markets is both insightful and provocative, exploring the creative and cultural trends that are driving brands and innovation around the world right now …

Here are some of the big themes:

Machine Vision …from detecting corruption to diagnosing cancer, there are a multitude of uses for this AI technology

Facial recognition grabbed headlines around the world this year for some sinister-sounding reasons. In October, China started using 200 million cameras to rank people’s behaviour as part of its ‘Social Credit System’ rollout. Sorting your recycling properly and engaging in charity work unlocks perks such as cheaper public transport and shorter wait times at hospital. But those caught jaywalking or smoking in non-designated areas face punishments.

Meanwhile, Australia also prepared to introduce a crime-fighting system – ominously called ‘the capability’ – that can recognise people’s faces in real time and then match them to a government database. And in Cardiff, the UK police tested similar technology – although the consensus was that ‘considerable invest- ment’ is still required before a rollout.

Stanford University is developing systems that can recognise skin cancer with a 95% success rate, which is more reliable than the best dermatologists. Harvard and Vermont universities are also working on algorithms that can diagnose mental illnesses such as depression by analysing people’s Instagram accounts (in particular, the filters and colour tones that the person favours).

Berlin-based startup Peat announced it was using machine vision to help farmers grow healthier crops with higher yields. The app’s users – 80% of whom live in India – simply point their phone’s camera at the crop to receive updates on disease and advice on how to solve any issues. And another startup called Entrupy (which is backed by Facebook’s director of AI research, Yann LeCun) revealed that it could now detect counterfeit handbags with a 98.5% success rate.

Follow the Crowd …influencers were everywhere in 2018, but are they about to be usurped?

In February last year, 21-year-old reality TV star Kylie Jenner took to social media to criticise Snapchat’s new design and the firm’s market valuation fell $1.3bn on the heels of her single tweet – proof of how powerful influencers have become. Disconcerting stock market fluctuations aside, influencers have been at the centre of many big and successful campaigns in 2018 (think Nike’s Nothing Beats a Londoner). And for good reason – businesses reportedly earned an aver- age of $7.65 for every $1 spent on influ- encer marketing, according to Influencer Marketing Hub.

But accusations of influencer fraud were also rampant in 2018. A worrying 72% of accounts reached through Ritz-Carlton’s influencer marketing efforts were exposed as fake by Points North Group this year. Also, incidents like Logan Paul’s ill- fated trip to a known suicide hotspot in Japan and Kuwaiti social media star Sondos Alqattan’s fury at improved conditions for migrant domestic workers underscored how unstable high-profile influencers can be.

Incidents like these have prompted the rise of a new breed of influencers like Lil Miquela, a freckled Spanish Brazilian American. Miquela attends fashion events, hangs out with artists, and wears the most talked about clothing brands. Her Instagram account boasts 1.5 million followers and she has worked with Prada and has appeared in Vogue. But – and here comes the kicker – Miquela isn’t a real person. She is computer generated. A virtual influencer owned and operated by a Los Angeles company named Brud.

The rise to fame of virtual influencers like Lil Miquela has led to debate about what is real in social media land. Social media personalities are often criticised for creating a false veneer, showing only a highly curated version of themselves to

Divisive Value …brands are no longer shying away from polarising political and social issues, and they’re increasing their fame and fortune in the process

The unspoken rule for brands used to be to remain as politically neutral as possible in order to appeal to the greatest mass of people. It’s why when Michael Jordan was asked to endorse a Democratic candidate in the 90s he reportedly declined on the grounds that Republicans bought his sneakers, too. But now brands are coming out to take a stand on controversial political and social issues. And it’s no wonder that they’re doing so; companies don’t oper- ate in a bubble.

The most obvious recent example of a brand expressing divisive values has got to be Nike’s Dream Crazy ad. On the surface, the commercial, created with Wieden+Kennedy, looks like a classic Nike ad celebrating athletic achievements. But the narrator isn’t just any athlete, he’s the former NFL player who sparked a movement by kneeling during the national anthem to protest racism in America, and as such has been painted as both brave and unpatriotic.

By casting quarterback-turned-activist Colin Kaepernick, Nike declared him a hero in the fight against racial inequality. This controversial stance made Nike’s ad an international news story, earning the brand $48m of media within 24 hours. And although some Americans promised to boycott the brand, its sales increased by 31% in the days following the ad’s release. By clearly articulating its views, Nike avoided the trap of trying to please everyone and pleasing no one.

Future Foods … people’s attitudes to food are changing, and science is beginning to catch up

2018 was the year we started saving the world with burgers. Well, if you want to get technical about it, this was the year that consumer attitudes and new technologies came together to provide the motivation and the means to revolutionise food.

Scientists and environmentalists have been telling us that meat production is bad for the environment for years (according to a 2013 United Nations report, livestock industries produce 18% of greenhouse gases, more than the entire transport industry), and until now we’ve pretty much ignored our social and environmental consciences and kept on eating it. Why? Because burgers made of meat are delicious and there was no good alternative.

America’s oldest burger chain, White Castle, added the Impossible Burger to its menu. When we spoke to Jamie Richardson, VP at White Castle, he explained they did it because they’d noticed younger people’s attitudes towards meat shifting. Every year White Castle surveys its 10,000 team members, 52% of whom are under the age of 25, to get a sense of its community’s values. ‘We saw that environmental and social responsibility issues are really important to them,’ he said. ‘Especially our millennials and Gen Zs.’

Retail Hacked … retail has always been competitive but things have moved up a gear. Survival of the fittest, fastest, smartest and most creative is now the order of the day.

At the end of Q2 2018, Amazon stunned the market by reporting a tidy $2.5bn profit. But ‘The Everything Store’ did not just earn that surplus from selling us stuff. Analysis suggests that advertising has become a significant contributor to the bottom line. And the potential implication is sobering: our most significant retailer might not need to make money from shifting goods in the future. As long as Amazon can keep the sales ticking over, learning more about its customers in the process, it can earn more money from advertising. That’s great if you’re Amazon, but what about everyone else? What is it going to take to survive, to thrive even, in a retail landscape where the old rules just don’t seem to apply?

Farfetch is a luxury fashion platform that makes it easy for hyper-curated independent boutiques and sought-after brands all over the world to sell beyond their own back yard. It provides a slick interface and seamless online user experience, married to a world-class logistics operation. For shoppers that means access to the hot- test products with consistent, top quality service guaranteed. For retailers it means easy access to a global customer base with minimal risk and investment. That’s a win-win-win for platform, partners and patrons alike – a formula that helped Farfetch achieve a $5.8bn valuation at IPO in September.

In China, a platform called Ule.com (rough translation: HappyPost.com) is helping to restore the fortunes of rural grocery stores. A joint enterprise between media magnate Li Ka-shing and 200-year-old state-run China Post – the only organi- sation with complete last-mile coverage across the whole of China – Ule.com lets independent shops share inventory with stores across the whole country. ‘Being on the network makes each store a virtual Walmart’, explains Ule.com COO Samson Yeung.

UK startup NearSt shows similar thinking. The founders believe shopping at bricks-and-mortar stores should be easier than buying online: but that convenience is lost on people because smartphones are blind to the products on the shelves. For a flat fee of £199 ($253) NearSt’s NearLive technology can pull point-of-sale data from a wide range of systems, making it easy for anyone to see what’s available locally online.

Contrabrands … the legal cannabis industry is thriving but needs to shake off weed’s illicit associations

Cannabis is marching towards legal and social acceptance around the world, and it’s going to be big business. Arcview Market Research and BDS Analytics estimate that global consumer spending on legal cannabis will hit $57bn by 2027 and Bruce Linton, the CEO of cannabis company Canopy Growth, believes that it could disrupt global markets – from pharmaceuticals to snacks – to the tune of $500bn.

But while we might be witnessing the birth of a new industry, weed is a product that comes with a lot of baggage, and cannabis brands have a tough road ahead as far as marketing is concerned. To gain any sort of scale they will have to overcome decades of stereotypes about slackers and delinquents. To this end many brands are using careful design and partnerships to position themselves as high end.

Lord Jones, for example, this year started selling its CBD edibles in Standard International’s boutique hotels, in a bid to shore up its association with luxurious relaxation. Toast, meanwhile, is emulating top-shelf alcohol brands and marketing its pre-rolled joints as an alter- native to an evening cocktail.

Some cannabis-based startups are leaning heavily on the drug’s apparent medicinal qualities and hoping to capture some of the burgeoning wellness market. Dosist markets itself around being able to calm, relieve or even arouse you, with precise doses of tetrahydrocannabinol or THC (the psychoactive ingredient in mar- ijuana). These are administered through slick-looking vape pens (although the company is struggling with regulators even in markets, like Canada, where marijuana is wholly legal).